As a tax agency that has been in operation for over ten years, we handle a large volume of tax return cases every year. We have seen a lot of common mistakes made by younger taxpayers, for example, international students incorrectly claiming for self-education deduction.
Rules for Claiming Self-education Deduction
You may have a question, as a oversea student, could you claim your university course fee as a self-education deduction? The answer is NO. Here are the some of the basic rules around claiming self-education expenses like university fees as a tax deduction in Australia:
- You can claim a deduction for self-education expenses like tuition fees, textbooks, stationery, etc, only if your course is directly related to your current job/business activities. Simply studying a course to get a qualification or maintain/improve your skills is not enough – it must relate to your current income-earning activities.
- You cannot claim a deduction if your study is only related to getting a new job or income-earning activities you don’t currently engage in.
- You can only claim fees if you paid them in the same income year you are claiming the deduction. Unpaid fees cannot be pre-claimed.
The Requirement of Self-education Deduction Behind the Rules
While these rules may not seem directly relevant to international students, but there is an important eligibility requirement for self-education deductions hiding within:
Specifically, at the time of enrolling in the course of study, you must be legally employed in Australia, and your enrolled course must be highly relevant to improving your skills for this existing job.
This serves to demonstrate that the purpose of your learning is to further develop competencies for your current role, rather than simply to obtain a qualification or find better work in the future. As most student visa holders in Australia do not meet these criteria of current legal employment that is directly linked to their program of study, they traditionally do not qualify to claim any deductions for self-education expenses on their tax return as a consequence.
Student visa intent is to study, not work. The primary purpose for overseas students coming to Australia is to undertake an education program, not earn an income. Although it gives students part-time working rights, however, prior to enrolling and incurring tuition expenses, students can’t prove their intention of improving skills for the current job, as they were not permitted to work or be employed in Australia.
If you want to know more about self-education deduction in Australian tax return, please check the ATO’s page: https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/education-training-and-seminars/self-education-expenses